4.37 p.m.

Baroness Hollis of Heigham moved Amendment No. 3:

Page 3, line 21, at end insert:
("( ) Where
(a) as a result of a review of the current assessment, a fresh maintenance assessment is made which results in a reduction in the child support maintenance being paid to the person with care, and
(b) that person with care is in receipt of family credit
the amount of family credit shall immediately be re-calculated to take account of the reduction in child support maintenance.").

The noble Baroness said: In moving Amendment No. 3, I speak also to Amendment No. 46. The amendment refers to the issue of family credit. The income of many lone parents in low paid work will come from three quarters in future: their earnings; their

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maintenance; and their in-work benefit, family credit. There are 250,000 parents with care who are on family credit. However, unlike income support, family credit is calculated for six months at a time. There are perfectly sound advantages in that approach but in the context of child support there is one major disadvantage. I suspect that the Government recognise that it is a major disadvantage. I believe that we should, if we can, overcome it.

If family credit is fixed for six months at a time to top up the low pay plus maintenance to the prescribed figure and the maintenance falters or falls, then, because family credit is fixed for that period the sum will not rise to compensate for the loss of maintenance. Therefore the parent with care, struggling with small children, in low paid work, will find herself without the full family credit that she needs.

Why would family credit falter? Why would maintenance falter? For two obvious reasons. First, the absent father may fail to pay regularly because he seeks to avoid his responsibilities and, secondly, because his situation has changed. For example, he may have lost his job or taken a different job with lower pay and his maintenance contribution falls. But because the family credit is fixed for six months at a time, the woman may be stuck for five months on family credit which is lower than it should be because it was calculated when her maintenance was higher than it is. We believe that that is deeply unfair; hence this amendment which would uncouple family credit from maintenance payments. In other words, in addition to the woman's low earnings, she would receive family credit as in-work benefit. In the amendment we ask that the CSA should collect and keep from the absent father the maintenance to which the woman is entitled. The CSA would instead pay it all to her.

Thus, as with income support, the CSA would hand over the £15 disregard and keep 70 per cent. of the maintenance collected over and beyond the income support level. In an age of computers it would not be difficult to calibrate the family credit calculations. The proposal means that the CSA would pay the family credit plus maintenance jointly and assume that the maintenance remained constant at the figure first thought of when family credit was set. The CSA would then be responsible for collecting the maintenance from the father just as with income support arrangements. There would be no difference. That would protect the six month rule but would ensure that the parent with care was not penalised should maintenance falter. It need not be compulsory and provided that the Child Support Agency collects maintenance efficiently, the only cost would be administrative. If the agency does not collect efficiently, then it is not fair that the burden should fall on the parent rather than the CSA.

In such a situation, knowing that the additions to the woman's income are secure and in addition to her earnings from work, she can rely on a family credit and maintenance figure that remains unchanging. Provided the mother knows that, then, as the parent with care, she would try to remain in work. But without the amendment, should her maintenance falter and her

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family credit not float up to reflect it, the wise woman will leave work and go back onto income support to obtain a new adjustment of benefit. None of us would wish to see that, but it would be entirely sensible and rational for the woman.

I believe that the Government understand the problem because they have made adaptations to family credits following their own change in regulations so that the woman is not worse off. We are saying that the woman should not be worse off if the husband's circumstances change and, as a result, the family credit is frozen at an unrealistically low level for six months at a time. The amendment would take away the problem of the six months rule. It is sensible, not expensive and would make the Bill work better. I beg to move.